Finance Exam Review: Key Concepts and Calculations
Finance Exam Review
Dividend Valuation and Growth
PT Boats Dividend Valuation
PT Boats pays a $2.40 dividend per share for the next 2 years and a final liquidating dividend of $10 per share at the end of year 3. If the required rate of return is 16%, the current value of the stock is $10.26.
Main Street Ant Dividend Valuation
Main Street Ant pays an annual dividend of $2.40, decreasing by 2% annually. With a required rate of return of 15%, the current value of the stock is $14.12.
Factory Stores Dividend
Read MoreStatistical Inference: Hypothesis Testing and Confidence Intervals
Chapter 17: Inferences When Standard Deviation is Unknown
Big Idea: T-Test for Unknown Standard Deviation
The t-test is used when the population standard deviation (SD) is unknown. It has fewer conditions than z-tests for inferences about a mean:
- Data is a simple random sample (SRS) from a larger population.
- Observations follow a normal distribution.
- We estimate standard error using s / √n, where s is the sample SD and √n accounts for the variability of sample means.
T-Test Formula and Properties
The
Read MoreLinear Programming Problems and Solutions
Problem #B-1: Simultaneous Equations for Optimization
a. Maximize Z = 4×1 + 3×2
Subject to:
Material: 6×1 + 4×2 <= 48 lb (x1 = 2)
Labor: 4×1 + 8×2 <= 80 hr (x2 = 9)
x1, x2 >= 0 (Profit = 35)
b. Maximize Z = 6A + 3B
Subject to:
Material: 20A + 6B <= 600 lb (A = 24)
Machinery: 25A + 20B <= 1000 hr (B = 20)
A, B >= 0 (Profit = 204)
Problem #B-2: Microwave Oven Production
An appliance manufacturer produces two models of microwave ovens: H and W. The goal is to determine the quantities of H and
Read MoreInventory Management and Economic Order Quantity (EOQ) Analysis
Problem #12-1: ABC Inventory Analysis for the Welsh Corporation
The Welsh Corporation utilizes 10 key components in one of its manufacturing plants. The task is to perform an ABC analysis based on the provided data and explain the rationale behind the classification.
Data and Calculations
| SKU | Item Cost ($) | Annual Demand |
|---|---|---|
| WC219 | 0.10 | 12,000 |
| WC008 | 1.20 | 22,500 |
| WC916 | 3.20 | 700 |
| WC887 | 0.41 | 6,200 |
| WC397 | 5.00 | 17,300 |
| WC654 | 2.10 | 350 |
| WC007 | 0.90 | 225 |
| WC419 | 0.45 | 8,500 |
| WC971 | 7.50 | 2,950 |
| WC713 | 10.50 | 1,000 |
ABC Classification and Explanation
Based on the
Read MoreMultivariate Analysis of Variance (MANOVA)
MANOVA
NOTES
Using DVs in combination through MANOVA circumvents this high experimentwise error rate. Then ANOVA is used to identifymain source of these effects. Researcher is mainly interested inresults ofANOVA
MANOVA combines DVs in diff ways so as to maximizeseparation ofconditions specified by each comparison indesign. – designs including a within-subjects factor having more than 2 levels must meetsphericity assumption. However,most common within-subject factor in applied research is time
Read MoreTax Implications of Investment Property Ownership and Retirement Planning
REVISION QUESTIONS SELECTION
QUESTION 1
Jason, a 32-year-old physiotherapist earning $65,000 annually, seeks advice on purchasing an investment property for $400,000 with a $280,000 loan. He plans to reside in the property after six years. He has $120,000 in shares (current value $130,000, cost base $80,000) and anticipates the following property income and expenses:
Estimated Rental Income: $20,000
Estimated Expenses:
- Rates: $2,000
- Insurance: $600
- Loan Interest: $25,400
- Depreciation (fixtures and fittings)